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BofA, Citi Incorrectly Hid Billions in Repo Debt

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May 28, 2010 – Comments (10)

More in the ongoing Repo scam saga. This title from March by ZeroHedge The "Repo 105" Scam: How Lehman Fooled Everyone (Including Allegedly Dick Fuld) And How Other Banks Are Likely Doing This Right Now - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=352908 seems particularly apt.

This is another good one: Repo 105 - Very Funny - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=353970

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BofA, Citi Incorrectly Hid Billions in Repo Debt: Report
Published: Wednesday, 26 May 2010 | 7:04 PM ET

http://www.cnbc.com/id/37366067

Bank of America and Citigroup  incorrectly accounted for billions of dollars in debt over the past three years, according to a report from the Wall Street Journal.

The report highlights a form of corporate borrowing increasingly under scrutiny since the financial crisis began. The loans, known as "repos," or short-term repurchase agreements, allow banks to increase the amount of risk they can take in securities trading.


Both BofA and Citigroup disclosed in filings with the Securities and Exchange Commission that they have over the last three years accidentally classified some repos as sales when they should have been classified as borrowings, the newspaper reported. The amounts involved were small for the banks, though they totaled billions.

It is illegal under federal securities rules to intentionally conceal debt and mislead investors. Bank of America and Citigroup claim the accounting flaws were purely accidental and represent minute portions of their overall operations.

Bank of America, in addressing errors that reached up to $10.7 billion per quarter, noted that the flaws ”represented substantially less than 1 percent of our total assets," the Wall Street Journal reports.

10 Comments – Post Your Own

#1) On May 28, 2010 at 11:02 AM, russiangambit (29.14) wrote:

Yes, this is a good one. And to think of all the hoops we have to jump through to comply with SOX and the endless paperwork. Why bother when BOA and C get away with this kind of "mistakes" anyway for 3 years.

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#2) On May 28, 2010 at 11:04 AM, Superdrol (97.23) wrote:

there are so many flaws, political headwinds, and corruption in all the financials.  It still ceases to amaze me why people are buying financials.  That's a very hard way to make money and why I just stick with technology instead.  Lots of cash, no politics.

 

I'm sure it was all 'unintentional' though.  I bet Lehman Brothers taught them that trick.

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#3) On May 28, 2010 at 11:04 AM, binve (< 20) wrote:

russiangambit ,

>>. Why bother when BOA and C get away with this kind of "mistakes" anyway for 3 years.

Exactly. Thanks!.

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#4) On May 28, 2010 at 11:05 AM, binve (< 20) wrote:

Superdrol ,

>>I'm sure it was all 'unintentional' though.  I bet Lehman Brothers taught them that trick.

LOL! right on :)..

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#5) On May 28, 2010 at 12:10 PM, carcassgrinder (35.63) wrote:

That's funny....if I 'accidentally' plow a pedestrian with my vehicle...I'm pretty sure it's still a crime...

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#6) On May 28, 2010 at 12:12 PM, carcassgrinder (35.63) wrote:

...and the times I plow people with my vehicle represents less than 1% of my driving experiences.

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#7) On May 28, 2010 at 12:35 PM, binve (< 20) wrote:

carcassgrinder,

LOL! That is awesome!! Perfect comment.

>>...and the times I plow people with my vehicle represents less than 1% of my driving experiences.

Exactly. And the fact that they say it is less than 1% of assets is absolutely meaningless. Most of their assets is locked in in long term debt. A more interesting and salient comparison would be a comparison of repo sheltering agains reserves

Thanks!..

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#8) On May 28, 2010 at 11:04 PM, d1david (29.08) wrote:

"purely accidental" -- of course it wasn't purely accidental they had big fat bonus checks

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#9) On May 28, 2010 at 11:06 PM, d1david (29.08) wrote:

carcass.. good comparison

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#10) On May 29, 2010 at 10:20 AM, binve (< 20) wrote:

d1david ,

>>"purely accidental" -- of course it wasn't purely accidental they had big fat bonus checks

Exactly.

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